The High-Low Method of Estimating the Fixed and Variable Components

question 81

True/False

The high-low method of estimating the fixed and variable components of a mixed cost is a precise approach that uses a statistical technique.

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Definitions:

Marginal Costs

The increase in cost resulting from the manufacture of one additional unit of a good or service.

Decreasing Costs

Situations in which costs diminish as the level of production or scale of operations increases.

Efficiency

The extent to which time, effort, or cost is well-used for the intended task or purpose.

Total Cost Function

An equation that represents the total cost incurred by a firm in the production of goods or services, as a function of output level.